They say that things of consequence occur in groups of three, usually with very bad results. A prime example is three deaths in a row, or three strikes and you're out .
Let’s give this phenomenon further examination from an economic and financial standpoint. Back in the 1980’s, President Ronald Reagan was influenced to believe that if he would only renege just a little on his tax cut pledge, Congress would decrease spending.
He was told a combination of increased revenues and decreased spending would do wonders for the U.S. economy.
Heard that before?
President Reagan swallowed the Congressional pledge hook, line, and sinker. Unfortunately, there were tax hikes and no spending cuts. That action decimated the investment real estate industry, and created a debacle that took years to overcome.
Next, Hank Paulson pleaded with Congress in 2008, trying to convince them the financial world as we knew it was in dire condition. Paulson argued that if Congress didn’t immediately authorize over $700 billion in order to absorb all the toxic mortgages, it was over.
He said to expect chaos, martial law, and total anarchy, just to mention a few goodies. Once again, the story was accepted, hook, line and sinker. We all know how TARP turned out.
Now, President Obama, with the help of the Treasury Secretary, who was last seen as part of that martial law shakedown, has asked the Republicans to buy into tax increases now, for tax reform and spending cuts later.
All because of not raising the debt ceiling equates to credit default. I would ask, if that’s the case, then why are U.S. bond prices rising and interest rates falling? Will investors really choose Greek, Italian, or even Spanish debt to our debt? Will they find a safe haven in Portugal?
I don’t think so.
Oops, I’m not supposed to ask, or even think, there may be another way of solving these major issues. (My solution: Live within your money!) I’m just supposed to accept the instructions from his economists and professional politicians. I’m also expected to eat some peas, according to the president.
In my opinion, we should not raise the debt ceiling. We should pay the interest debt, pay the military, and then make the hard decisions on the rest.
If not, and John Boehner, just like Reagan and the TARP Congress, buys what the President is selling, that will be three called strikes, and we all know what that means for Boehner.
Along with his 40-years of dedication in the financial services industry, Bill is the President and CEO of GPSforLife, has recently authored a highly successful book entitled 44th: A Presidential Conspiracy, publishes his dynamic monthly financial newsletter MacroProfit, and faithfully continues his third decade on the radio with It’s All About Money, which can be heard weekdays on Money Radio in Phoenix and in podcast form on his website (and on smartphone apps) published at billtatro.com weekdays at 5pm Eastern. Bill can be reached via email at firstname.lastname@example.org and on Twitter @tatroshow.